Provides for a deduction from personal gross income for expenses incurred in the adoption of a child in the foster care system

Title of bill

An act to amend the tax law, in relation to providing for a deduction from personal gross income for expenses incurred in the adoption of a child in the foster care system

Purpose or general idea of the bill

To create incentives to decrease the number of children in foster care waiting to be adopted. This legislation creates a tax deduction for all expenses incurred by family adopting children from the foster care system.

Summary of specific provisions

Section 1: Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 39 which lists income tax deductibles for eligible families adopting a child in the foster care system.

Section 2: Provides for immediate effective date and shall apply to all taxable years beginning on or after the first of January in the year in which it shall have become law.

Justification

Currently, New York State has over 23,000 children in custody in its foster care system. For a large number of these children, returning to their natural parents is impossible. In 2011, there were over 6,400 foster care children waiting to be adopted and the median years each has to wait to be adopted is close to 4.5 years.

At an annual cost to New York State of over $33,000 per child in state custody, it is obvious that New York State government must do more to create incentives for families interested in adopting a child in the foster care system. This legislation gives adoptive families an income tax deduction for all the expenses incurred in such an adoption.

In addition, it is a well understood dynamic that the longer a child is in the foster care system, the slimmer the chances for adoption. As children age in state custody it becomes a negative for them because families tend to adopt younger children. Therefore New York must do more to place these children in health, loving and nurturing home environments. At a total annual cost of over $759 million dollars to maintain the 23,000 in state custody, it is clearly in the best interest of these children and to New York taxpayers to create incentives to reduce the number of children in government custody.

Prior legislative history

New Legislation

Fiscal implications for state and local government

Currently, New York spends over $33,000 annually for each child in the foster care system. In 2011, there were over 6,400 foster care children waiting to be adopted, but only about 7% or 417 children were adopted. Allowing families to deduct the estimated $2,000 to $10,000 in expenses incurred to adopt a child reduces the amount paid in taxes to NYS by less than $600 per each adoption. Obviously, it makes enormous economic sense to lose $600 per adoption in tax collection by creating incentives to remove children from state custody at the current yearly cost of over $33,000 per child.

Based on 2009 total adoptions from the foster care system, which placed 2,100 children with adoptive families, New York State tax collection would be reduced by about one million dollars. However, with over 23,000 children in State custody, during any given year, at the stated annual cost per child of over $33,000, the state will actually achieve savings in excess of the projected decrease in tax revenue for each child adopted due to the incentives provided in this legislation.

Effective date

This bill will take effect immediately.